Dwolla Subpoenaed in New York, Honored in Boston

Call it a moment of dueling realities for Iowa-based payments innovator Dwolla, a company with deep ties to the credit union industry through its support by CUSOs The Members Group and the Veridian Group.

Bad news came on one front, good news on another.

A few days ago, Bloomberg Newsreported that Dwolla was on a short list of companies New York's top banking regulator had subpoenaed in an investigation into the virtual currency Bitcoin.

In explaining the probe, N.Y. banking regulator Benjamin M. Lawsky wrote in a statement, “If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country’s national security, but also the very existence of the virtual currency industry as a legitimate business enterprise.”

Lawsky added, “It is in the common interest of both the public and the virtual currency industry to bring virtual currencies out of the darkness and into the light of day through enhanced transparency.”

The New York activity is representative of heightened governmental interest in Bitcoin. On Tuesday, Credit Union Timesreported that a $2.9 million Dwolla account owned by a Bitcoin pioneer and held at $2.4 billion Veridian Credit Union in Waterloo, Iowa, had been seized by the federal government.

Dwolla spokesperson Jordan Lampe said, in a written statement: “Neither Dwolla nor its financial partners process, sell, or package virtual currency products or services. Dwolla is a well-respected software system that innovates within the existing banking systems to allow eligible users the ability to safely and securely move U.S. dollars.

“Dwolla is known for providing an improved financial environment for greater economic growth, accountability and transparency, and has a rich history of promoting responsible innovation, regulatory compliance, and best practices which it intends to continue."

Lampe declined to directly comment on whether or not Dwolla had in fact been subpoenaed.

In an interview, Lampe did note that Dwolla’s present focus is on happier news, namely company founder Ben Milne’s appearance on the prestigious MIT Technology Review annual listing of top innovators under 35.

In a press statement, Dwolla and MIT said of Milne, “For his work in designing an improved framework for payments inside the U.S. financial system, Ben Milne of Dwolla has been honored as an outstanding entrepreneur and will be featured on the cover of MIT Technology Review’s special INNOVATORS issue.”